Following the introduction of the Central Goods and Services (CGST) Act, 2017, India’s tax authorities have adopted various steps to facilitate and ease compliance among taxpayers.
Registration: Every business involved in the supply of goods or services with an annual turnover above the threshold limit (which varies for different states) is required to register for GST. Registration can be done online through the Goods and Services Tax Network (GSTN) portal.
Tax Invoices: Registered businesses are required to issue valid tax invoices for all taxable supplies made to other businesses or customers. The tax invoice should contain specific details as prescribed by the GST Act.
Payment of GST: Registered businesses are required to collect GST from their customers and remit it to the government within the prescribed time frame. The GST payment can be made online through the GSTN portal.
Filing of Returns: GST returns need to be filed periodically, depending on the type of registration and turnover. There are different types of returns, such as GSTR-1 (outward supplies), GSTR-3B (summary return), and GSTR-9 (annual return). These returns provide details of the business's sales, purchases, and tax liability.
Input Tax Credit: Registered businesses can claim input tax credit on the GST paid on their purchases, subject to certain conditions. Input tax credit can be utilized to offset the output tax liability.
Compliance with Anti-Profiteering Rules: The GST Act includes provisions to prevent businesses from taking unfair advantage of GST by not passing on the benefits of reduced tax rates or input tax credit to customers. Businesses need to ensure compliance with the anti-profiteering rules.
Audit and Assessment: The GST Act provides for audit and assessment of businesses to ensure compliance. The authorities may conduct audits or assessments to verify the accuracy of GST returns filed by businesses.
At the same time, the CGST Act has also prescribed strict provisions to ensure compliance and enforcement across various areas of GST such as GST registration, filing GST returns, and correct entry of invoices.
GST Compliance Requirements | |
Registration compliance | It is a turnover based compliance wherein, any person who has a turnover exceeding INR 4 million in goods and INR 2 million in services in the previous financial year needs to get registered in the GST regime and thus, start following other compliances as a registered supplier. |
Invoicing related compliance | Every registered dealer under GST needs to be compliant with certain details while issuing a tax invoice, which lists down as under: – Invoice number and date; – Customer name; – Shipping and billing address; – Customer and taxpayer’s GSTIN (if registered); – Place of supply; – HSN code/ SAC code; – Item details i.e., description, quantity, unit, the total value; – Taxable value and discounts; – Rate and amount of taxes; – Whether GST is payable on a reverse charge basis; and – Signature of the supplier. The above details are mandatory in a GST invoice to ensure compliance. |
Returns related compliance | The filing of return is one of the most important things in compliance under the GST. |
Other compliance | E-way bill: It is an Electronic Waybill for the movement of goods. A GST registered person cannot transport goods in a vehicle whose value exceeds INR 50,000 (Single Invoice) without the cover of an e-way bill. Payment of taxes: A person who has a liability to pay tax on his outward supplies/sales needs to pay the taxes while filing the return GSTR-3B monthly or quarterly as applicable. |
In case a taxpayer fails to fulfill these GST compliance requirements, they will be considered an offender under the Act and will be liable for penalty, as prescribed.
Section 122 to section 128 and section 132 of the CGST Act enlist provisions for 21 such activities, which are classified as offenses under the Act, as well as the consequent penalties applicable in case of commission or omission of the given offenses.
Any registered taxable person who is involved in offenses specified under the Act will face punishment in the form of penalty, prosecution, and in certain cases, even arrest.
In case a taxpayer fails to fulfill these GST compliances, they will be considered an offender under the Act and will be liable for penalty, as prescribed.
Section 122 to section 128 and section 132 of the CGST Act enlist provisions for 21 such activities, which are classified as offenses under the Act, as well as the consequent penalties applicable in case of commission or omission of the given offenses.
Any registered taxable person who is involved in offenses specified under the Act will face punishment in the form of penalty, prosecution, and in certain cases, even arrest.
Offenses and Penalties Under CGST Act, 2017 | |||
Section of GST Act | Categories | Offenses | Penalty |
Section 122(1) | Fraud |
| In case of these offenses, the offender shall be liable to pay a sum, whichever is higher:
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Tax evasion |
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Offenses related to TDS and TCS |
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Offenses related to ITC |
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Offenses related to transportation and storage |
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Failures |
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Miscellaneous offenses |
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Section 122(2) | Concerning supplier of goods and services |
| If convicted of fraud, offender shall be liable to pay a penalty, whichever is higher:
|
If other than fraud: offender shall be liable to pay a penalty, whichever is higher:
| |||
Section 122(3) | Not directly involved in tax evasion but convicted of aiding and abetting it |
| Offenders committing these offenses shall be liable to pay a penalty which may extend to INR 25,000 (US$345.35).
|
Section 123
| Failure to file information return (IR) | The stipulated period to file Information Return is 30 days from the date of issue of show cause notice. | In case of such failure, offender shall be liable to a penalty of INR 100 (US$1.38) each day for which the failure continues. Such a penalty cannot exceed INR 5,000 (US$65.07). |
Section 124 | Failure to furnish statistics |
| Offender shall be liable to a fine of up to US$138.14 (INR 10,000). But where the offence is continuing, a further fine of INR 100 is levied each day for which the failure continues. However, such a penalty cannot exceed US$345.35 (INR 25,000). |
Section 125 | General penalty | Contravention or breach of:
| Penalty for an amount up to INR 25,000 can be imposed. |
Section 132 | Offenses liable for prosecution |
| Depending on each offence type, offender shall be liable to be punished with:
|
If a dealer or a taxpayer is not satisfied with the decision or an order passed against them by an adjudicating authority, regarding the offences prescribed under the GST act, they may appeal to the First Appellate. If still dissatisfied, they may appeal to the National Appellate Tribunal, and thereafter to the concerned High Court, and finally to the Supreme Court of India.
Advance ruling under GST
An advance ruling is a written interpretation of tax laws, issued by tax authorities to those corporations and individuals who request for clarification of certain tax matters before starting the proposed activity.
An advance ruling on a certain matter not only brings the much-required clarity and certainty, but also fosters a transparent regime, allowing taxpayers to resolve potential disputes in a timely and inexpensive manner instead of the arduous process of litigation. This mechanism is particularly favorable to foreign investors, who will gain a clearer picture of their future tax liability at the beginning itself.
The advance ruling can be requested from the officer concerned by making an application through Form GST ARA 01. The request can be made for seeking clarity in provisions relating to the following cases: